BoE's Weale sees gradual economic improvement next year - report

LONDON Britain's economy may shrink in the fourth quarter but is likely to pick up gradually next year, Bank of England policymaker Martin Weale said in an interview published on Thursday.

"I think there is a significant risk of a contraction in the fourth quarter, at least in the headline figures," Weale told news agency Dow Jones.

"I do expect to see a gradual improvement next year and in part that will be a consequence of the positive effects of the Funding for Lending Scheme," he added, referring to a scheme that provides cheap funding to banks if they keep up lending.

The BoE's Monetary Policy Committee voted not to extend the central bank's 375 billion pound asset purchase programme earlier this month, and minutes of the policymakers' meeting published on Wednesday showed they also ruled out cutting interest rates.

In a speech on Wednesday, Weale said Britain's poor productivity meant further BoE stimulus would not be able to generate growth without stoking excess inflation.

(Reporting by Olesya Dmitracova; editing by Steve Addison)

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